What are the “9% Credit” and the “4% Credit” (“Applicable Percentages”)?
There are two Credit rates, or Applicable Percentages, a “9% Credit” and a “4% Credit”, depending on the type of Project. The Applicable Percentages were initially set at 9% and 4%, but after 1987 the Applicable Percentages were adjusted on a monthly basis by the U.S. Department of the Treasury. Depending on the type of project, the present value of the Credit over a 10 year period equals 70% (the “9% Credit”) or 30% (the “4% Credit”) of a Projects Qualified Basis. The “9% Credit” is available for new construction and substantial rehabilitation Projects without other federal subsidies. Substantial rehabilitation is when rehabilitation and related expenditures incurred during any 24 month period are equal to at least the greater of $3,000 per Low-Income Housing Unit or 10% of the depreciable basis of the Building(s) as of the beginning of the 24 month period. The “4% Credit” is available for Projects which involve acquisition of an Existing Building or for Projects which are Federally S
